Miscellaneous Employee Benefit Provisions of the CARES Act

COVID-19 Update

Employer Repayment of Employee Qualified Education Loans

From March 27 through the end of 2020, employers may use an Internal Revenue Code Section 127 educational expense reimbursement plan to assist employees in repaying their student loans obtained for qualified higher education. Employer payments may be made either directly to the lender or by reimbursement to the employee. Such payments are not taxable income to the employee, up to the statutory limitation of $5,250 for all educational expense reimbursements to the employee during 2020. To the extent that an employer’s payment is attributable to interest in the loan, the employee is not entitled to deduct such interest under Section 221 of the Code.

Telehealth Services Through High-Deductible Health Plans

For plan years beginning before the end of 2021, high-deductible health plans may offer telehealth services and other remote services without applying any deductible to the payment for such services. The lack of a deductible for telehealth services and other remote services during such plan years will not disqualify participants in high-deductible health plans from contributing or receiving employer contributions to health savings accounts.

Over-the-Counter Medical Expenses

Expenses incurred on and after January 1, 2020, for certain feminine hygiene products may be paid or reimbursed from health FSAs, HSAs, HRAs and Archer MSAs.

How Manatt Can Help: Manatt is prepared to work with employers that wish to add these or other benefits to their employee benefit programs in order to offer additional healthcare options and financial assistance to employees affected by the COVID-19 pandemic.

For More Information: Contact David Herbst, partner, Manatt Tax, at dherbst@manatt.com or 650.812.1320.

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